President Taps Budgets for Special Fund to
Encourage Innovation

The University is moving ahead to identify funds for
internal reallocation to be designated specifically for new
ideas and initiatives in ways the normal biennial budget
process does not allow.

To accomplish the reallocation, beginning with the 1997-99
biennium, 1 percent of all designated operating fund (DOF)
and general operating fund (GOF) budgets will be collected
and established in a central fund, to be known as the Fund
for University Initiatives. It is estimated that the amount
to be collected in the fund in 1997-99 will be approximately
$8 million. On behalf of their schools, colleges, or units,
deans and vice presidents will be able to propose
programmatic initiatives for funding . The initiatives may
be disciplinary or interdisciplinary and are intended to
enable the University to respond to emerging needs in
important areas for which there may not be an immediate,
identifiable source of funding. Discussions of how the
funds will be allocated are still in progress, though the
decision-making process will be consultative.

In his speech to the campus last Nov. 14, President Richard
L. McCormick cited the need to think strategically as a
university and called on the campus "to make the hard
choices to seize the right opportunities," and he spoke of
influencing the University's evolution "in a directed way."
"Those abstract words need a mechanism to make the idea
real, to give it substance," said McCormick in commenting on
the 1 percent assessment. "If we are going to do as I
proposed last November, we need to have some flexible
resources at hand to be able to fund some of the innovative
and cutting edge developments around here, activities which
we should be pursuing if we are to remain a leading,
competitive, ever-changing and vibrant institution. To put
it another way, as a University we are currently over extended, with no
flexibility to do some of the exciting
things of which I know we are capable. This 1 percent
assessment will give us that small amount of flexibility to
make some new and creative things happen."

The idea for the assessment has been the object of
discussion for several months in the Senate Committee on
Planning and Budgeting and the University Budget Committee.
It has also been discussed by the Presidentís Council and
received support from the Board of Deans. While there is a
general recognition of the difficulty of turning back 1
percent for this purpose, there has emerged a consensus
among these groups on the need to develop the institutional
capability to fund such initiatives. The Board of Regents as
well has been supportive of the University moving in this
direction.

"Do we need this kind of fund?" asked John Junker, chair of
the Faculty Senate. "I think any sensible, realistic person
looking at the funding possibilities for higher education
from the legislature, federal government and private sources
would say Yes, new initiatives must be funded with existing
resources, at least to some extent." Junker continued, "So
what is the least bad way of getting this funding? A 1
percent charge per biennium, administered without exception
across the campus, and available for new initiatives without
exception across the campus, is the best notion Iíve seen of
how to do this."

McCormick made it clear that the purpose of the fund is not
to substitute for initiatives that can be pursued through
existing biennial budgetary channels. It is intended to give
the University the capability to move quickly in taking
advantage of situations that arise outside of the two-year
budget cycle. He also acknowledged that he has no
misconceptions about how difficult it will be for deans and
vice presidents to find the 1 percent money. "I am fully
aware of how lean our budgets are. But we cannot let that
fact prevent us from pushing the University forward, to
force change in exciting and emerging new areas. We have to
do it if we are to remain competitive with our peer
universities who are not standing still."

Sue Hegyvary, dean of the School of Nursing and chair of the
Board of Deans said, "The Board of Deans supports
establishing the reallocation fund, because the University
must have some funds available to respond to extraordinary
opportunities on short notice. We know all too well that
implementing a 1 percent reduction repeatedly in all units
will require us to think differently than we have in the
past--more toward long-range planning and less on short-term
linear thinking. The key to success will be not only to
reallocate the money to the right causes, but also to plan
differently in all the units. In previous budget reductions,
weíve tended to see only two possibilities: across the
board, or vertical cuts, i.e., program eliminations. We have
to create additional alternatives--integrating programs,
updating support systems, collaborating across traditional
departmental and school boundaries. The need to think
differently is not unique to the UW. Itís happening all over
the world."

"The notion of a true reallocation fund for the University
is an exciting and timely concept," said Dean of Arts and
Sciences John B. Simpson, "even though it will cause
difficulties in its inception. This sort of fund has long
been needed in this institution to enable us to respond to
changes and opportunities in the academic world."

The following guidelines for using the fund emerged out of
discussions among the deans, the University Budget
Committee, and the Senate Committee on Planning and
Budgeting:

Resources from the fund will be dedicated to important
programmatic initiatives, new or existing, that will result
in a significant enhancement to the quality of the
University.

The fund will be established initially for a 10-year
period and will be replenished by a 1 percent charge in each
biennium. There should be periodic formal reviews of the
effectiveness of this policy.

The fund shall not be used as a general budgetary reserve
or to "fix" problems such as unfunded inflation costs or
state budget cuts.

Support unit budgets will also be subject to the 1
percent charge. They should expect on average (but not
individually), to receive allocations totaling at least 50
percent of the amount they provide.

Proposals may be originated by deans, vice president and
the provost. The provost will consult broadly and regularly
with the Senate Committee on Planning and Budgeting, the
Board of Deans, and the University Budget Committee on the
use of the Fund.

In circumstances of exceptional economic hardship for the
University, the president may suspend or reduce the 1
percent charge.

To the extent possible, allocation of the fund should be
separate from the regular budget cycle.

Discussion about the process of allocating money from the
fund will continue in the Senate Committee on Planning and
Budgeting, the University Budget Committee, and the Board of
Deans.